As we enter 2020, carmaking giant Toyota produces and sells the majority of the world’s hybrid cars and SUVs. That may prove to be a problem over the next decade. The world’s most profitable mass-market carmaker has made no secret of its antipathy toward battery-electric vehicles during the past 10 years.
In 2012, it canceled its plans for a tiny, two-seat electric car—while saying the only suitable use for batteries was low-range urban vehicles. By 2017, that had evolved into the belief that plug-in hybrids would catch on far more quickly than battery-electric vehicles. This year, it said it will work on next-generation solid-state cells with its long-term partner Panasonic; it has claimed in the past that such cells are a necessary prerequisite for volume production of EVs.
In 2010, Toyota’s caution may have been justified as it moved toward the 2015 production of the Mirai, its first hydrogen fuel-cell vehicle. That year, the Nissan Leaf launched with an EPA range of 117 km—and the Tesla Model S was still two years away from production. Today, however, Tesla sells tens of thousands of Model 3s a month, and every major maker in the world is ramping up its EV efforts.
The giant VW Group is one of the few global makers to match Toyota’s annual sales of 10 million vehicles. It now says it hopes to sell 1 million battery-electric cars a year by 2025. A year ago, GM concluded full electric vehicles are the sole way forward and killed off its Volt plug-in hybrid.
Enter the RAV4 Prime
Meanwhile, Toyota has just announced its third-ever volume vehicle with a plug, the RAV4 Prime. It’s a plug-in hybrid version of the RAV4 compact SUV, unveiled at last month’s Los Angeles auto show.
The 2021 Toyota RAV4 Prime is a crossover—the form factor every buyer seems to want these days—that offers a projected 62 km of range. It will also have the second-fastest acceleration of any vehicle in the Toyota lineup. It sounds like a pretty great package, right?
Toyota’s core two-motor hybrid powertrain has been through multiple generations since it launched in 1997. The company has now built close to 15 million hybrids, considerably more than half the hybrids on the world’s roads.
Hybrids yes, plugs no
But the company’s efforts to add plugs to its hybrids have been minimal. The 2012 Prius Plug-In Hybrid had a 4.4-kilowatt-hour battery and only managed 17 km of range on the EPA test cycle. That compared to the first-generation Chevrolet Volt, with 56 km or more.
The 2017 Prius Prime was a considerably better car that operated as a pure EV while its battery had charge, but it was still rated at only 40 km—at a time where the second-generation Volt hit 85 km.
Nine model years after the first plug-in Prius, Toyota seems to be switching its marketing pitch for the new RAV4 plug-in from fuel economy to power. That mirrors Ford’s approach with the Grand Touring versions of its Lincoln Aviator and Corsair luxury SUVs. They’re sold as the most powerful versions, and little is said about their ability to the plugin, despite the federal income-tax credits buyers receive for the plug-in feature.
Signs of desperation?
Still, Toyota maintains it has no pure electric cars on the near-term horizon for North America. So what’s driving this recalcitrance? One argument may be that Toyota simply wants to retain its legendary profit margins in mass-volume vehicles. It would almost certainly lose money on its first car with a battery pack providing 320-plus km of range.
But its hybrid system isn’t cheap either, with a high-voltage battery pack, power electronics, and a pair of electric motors—all pricey components, even in volume. Indeed, hybrid cost reductions may not have come as quickly as Toyota hoped. It remains the dominant maker of hybrids, distantly followed by Honda and Ford. But the bulk of the global supply chain still sends most of its output to just one hybrid maker: Toyota.
This past April, the company announced it would grant royalty-free licenses to the intellectual property for its hybrid drivetrain to any maker who wanted them. (Its battery-pack patents were notably not included.) The news attracted little attention and may interest only smaller makers that can’t afford to develop their own hybrids. Those already include Mazda and Subaru.
Viewed through a skeptical lens, though, the Toyota offer can be read as a sign of desperation by a company that expected hybrid technology to be an industry-standard after 20 years. That would have expanded the supply base and further lowered its costs, adding to its first-mover advantage.
Meanwhile, three other factors have further altered the equation. First, battery-cell costs have fallen far faster than anyone predicted in 2010. Second, China announced in September 2017 it would ban the sale of vehicles with combustion engines at some future date.
Finally, the Volkswagen diesel-emission cheating scandal has made battery-electric vehicles the preferred path for European manufacturers facing painfully tough reductions in tailpipe carbon-dioxide emissions. Today, literally dozens of cell-fabrication plants are under construction globally to supply batteries for those millions of EVs each year.
All those factors would seem to point to Toyota adjusting its strategy and adapting to a future in which battery-electric vehicles form part of its lineup.
But that doesn’t appear to be the case. This leads to the second possible explanation: Toyota may be caught on the horns of the Innovator’s Dilemma. That is, it’s so devoted to its pioneering hybrid technology it can’t see how the landscape is changing and where the world is going.
The textbook example is the computer disk-drive industry. In the 1970s and 1980s, industry leaders rose and fell as the disk drive they specialized in (14″, then 8″, then 5.25″, and finally 3.5″) ascended to prominence and then collapsed into oblivion.
Could this phenomenon be creeping up on Toyota? In fact, that very argument was advanced in a remarkably prescient article by Matthew Klippenstein wich asked, simply, does Toyota’s hybrid leadership blind it to electric cars?
Meanwhile, Toyota’s continuing antipathy to cars with plugs is reflected in an ad touting the virtues of the Corolla Hybrid. One benefit? It doesn’t a plug-in. The theme echoes numerous earlier marketing slaps at EVs from Toyota and Lexus.
Why such stubbornness? Well, consider the background of the chairman of Toyota’s board of directors. Since June 2013, that position has been held by Takeshi Uchiyamada, the lead developer of its hybrid-electric technology—the man known as “the father of the Prius.”
Toyota, nonetheless, will now have to build electric cars in volume—reluctantly, and probably resentfully—in one place: China. It now offers plug-in hybrid versions of its Corolla and Levin models, but they’re sold only there.
Last month it announced a partnership with BYD, which put its first electric cars on the market back in 2009 and is one of the country’s leaders in EVs. The pair will form a new 50-50 joint venture next year to design and develop battery-electric vehicles from the ground up. It will be staffed from both companies’ existing R&D and engineering departments.
For the next two or three years, we don’t expect to see any battery-electric vehicles from Toyota in North America—despite plans for an array of new EV models from Audi, BMW, Ford, Jaguar, Mercedes-Benz, Nissan, Tesla, Volkswagen, and others.
In the near term, the next generation of the Mirai hydrogen fuel-cell vehicle is a large, rear-wheel-drive sedan as handsome as the current Mirai is homely. For now, Toyota is sticking firmly with hydrogen—not electricity—as its zero-emission technology of choice.
Which is a shame, because the Toyota name on an electric car would likely bring in buyers who wouldn’t consider a Tesla, a GM car, or a Volkswagen EV. But don’t hold your breath for a Toyota EV any time soon. It could be a long wait.
Our mission is to promote innovative technology vehicles through the use of alternative fuels and electricity as their vehicles propelling energy sources.
Countries ‘Walk the Talk’ on Transparency and Climate Action
UN Climate Change News, 11 November 2021 – at COP26 in Glasgow, 17 countries shared updates on climate action over the two days- Multilateral Assessment (MA) and Facilitative Sharing of Views (FSV) events.
Lucid: we can take it to a whole new level of range and efficiency
Lucid Air is finally going to come to market this year after a delay of a few years – likely becoming the first of the new wave of California EV startups to bring an electric car to production after Tesla.
Most EV charging infrastructure is wasted due to lack of “new thinking”
While some, like Tesla superchargers and chargers at prime workplace parking lots, see heavy use, many of them sit idle. The reason to it is they were designed for an already fading first era of electric vehicles.
Countries ‘Walk the Talk’ on Transparency and Climate Action
UN Climate Change News, 11 November 2021 – at COP26 in Glasgow, 17 countries shared updates on climate action over the two days- Multilateral Assessment (MA) and Facilitative Sharing of Views (FSV) events.Read more
Race To Zero
Race To Zero is a global campaign to rally; leadership and support from businesses, cities, regions, investors for a healthy, resilient, zero-carbon recovery that prevents future threats, creates decent jobs, and unlocks inclusive, sustainable growth.Read more
Electric cars VAT exemption plan
There’s currently a wide effort to involve electric car incentives in recovery plans around the world and in Europe, it might actually work.Read more
Universal Smart EV charger
Charget to Charge Electric Marathon 2021 Star Race with Latest Smart Charger!Read more